Some of Britain’s most influential business chiefs are demanding the Government scrap a planned hike in the corporation tax rate and instead slash it dramatically right now.
They say the tax – currently 19 per cent but set to rocket to a massive 25 per cent next year – should be cut to as little as 12.5 per cent.
That would give Britain’s flagging economy a vital shot in the arm as the country faces the spectre of stagflation with growth stalling while inflation spirals out of control.
Plea: Top bosses insist it is vital Boris Johnson and Chancellor Rishi Sunak abandon their plans immediately and return to a tax-cutting pledge made by former Chancellor George Osborne
Last night, hotelier Sir Rocco Forte, investment guru Sir Paul Marshall, pub boss Tim Martin, advertising tycoon Sir Martin Sorrell, former NatWest chairman Sir Philip Hampton, ex-Pizza Express boss Hugh Osmond and Phones4u founder John Caudwell all cautioned against a ‘damaging’ hike in business taxes next year.
They insist it is vital Prime Minister Boris Johnson and Chancellor Rishi Sunak abandon their plans immediately and return to a tax-cutting pledge made by former Chancellor George Osborne six years ago. Osborne had outlined plans to reduce corporation tax to 15 per cent to lure more investment into Britain and boost economic activity.
In an exclusive article for the MoS’s Saturday 5pm briefing at mailplus.co.uk, Forte – a Tory donor who gave £100,000 to Johnson’s Election campaign in 2019 – warned he would not be able to continue supporting him without action to cut taxes.
He warned that many other donors who want to see business and entrepreneurship properly backed would also withdraw their support unless Johnson returned to ‘traditional Tory principles’.
Forte said he was unhappy that Sunak had ripped up the pledge for a 15 per cent corporation tax rate. He added that the rise would have ‘clear and damaging implications for our economy’.
He said: ‘Many international companies which previously saw the UK as an attractive place to do business are now questioning whether there are better opportunities on the Continent.’
Forte said he felt ‘more depressed about the UK’s prospects than at any time since the 1970s’.
Sir Paul Marshall, chairman of investment giant Marshall Wace and a donor to the Vote Leave campaign ahead of the 2016 Brexit referendum, said: ‘Raising corporation tax is the wrong thing to do.
‘The Treasury consistently fails to understand the collateral benefits of lower corporation tax in terms of attracting global companies to the UK and incentivising employment. Lower corporation tax feeds through into higher income tax and VAT receipts.’ He said the tax should be cut to 12.5 per cent.
The barrage of complaints against the Government’s proposals follows widespread criticism of other tax rises including a 10 per cent increase in National Insurance contributions for those on average salaries. The main National Insurance rate for employees rose from 12 per cent to 13.25 per cent in April.
JD Wetherspoon boss Tim Martin said corporation tax hikes ‘threaten enterprise and deter investment, and therefore Treasury receipts’.
He said: ‘The country needs a sensible economic plan. Having wildly overspent [during the pandemic], huge taxes have been levied to make up the shortfall. This dodgem car approach is mad.’
Former Pizza Express chief executive and Punch Taverns founder Hugh Osmond described the corporation tax rise as ‘incredibly stupid’ as many businesses are only just finding their feet after lockdown measures dried up custom. Osmond, a prominent Tory donor, said the Government cannot make up its mind whether it is trying to be low tax and low spend or high tax and high spend.
Sir Philip Hampton, former chairman of Royal Bank of Scotland and Sainsbury’s, said the corporation tax hike ‘is going to have some impact on levels of investment because companies will have less money’.
‘I do have sympathy with the Chancellor’s need to raise taxation. But whether a big increase in corporation taxation is right at this time is very debatable,’ he said.
Sir Martin Sorrell said inflation is out of control as it heads for 11 per cent, interest rates are rising – possibly to 3 per cent – and a slowdown is inevitable.
He warned that raising corporation tax and National Insurance is ‘probably going to have a significant negative effect on the growth of the economy’.
John Caudwell, the Phones4u founder and philanthropist, said: ‘Britain has to remain a competitive place to set up business. We are now a high tax environment and we have to create growth. Corporation tax will hinder growth.’
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